What is the purpose of an appraisal in real estate?

The purpose of an appraisal in real estate is to estimate the market value of a property. An appraisal is an unbiased professional opinion regarding the value of a property, determined by a licensed appraiser who evaluates various factors, including comparable property sales, the property's condition, location, and the current real estate market conditions. This value estimate plays a critical role in various real estate transactions, including financing, buying, and selling.

Understanding the market value is essential for buyers and sellers to ensure that the property is priced appropriately and to help lenders determine how much to lend if the property is being financed.

While negotiating the final sale price and verifying the condition of the property are important in the real estate process, these aspects are outcomes or discussions that may follow an appraisal rather than the primary function of the appraisal itself. Assessing potential rental income is also a different aspect of real estate valuation, focusing on investment properties rather than determining the overall market value of the property, which is the core objective of an appraisal.